The Crypto Industry Wasn’t Able to Buy Congress After All

The Senate voted 49-50 on Tuesday against cloture on the motion to proceed to the Digital Asset Market <a href="https://xpertsstudio.com/xrp-clings-to-50-day-ema-support-after-clarity-act-setback/” title=”XRP clings to 50-day EMA support after CLARITY Act setback”>Clarity Act, better known as the CLARITY Act. The bill needed 60 votes to reach the floor for debate and a later vote on passage, but it couldn’t even get that.

That outcome is a setback for an industry that has become one of the largest lobbying forces in Washington. Crypto groups spent the past two years pushing for a federal market-structure law, and the Trump administration made digital assets a policy priority from the very start of the president’s second term in office. However, the bill still stalled, and many closely tracking or involved with the legislation argued that ethics concerns around the president’s own crypto businesses were a major reason it failed.

As a quick review, the CLARITY Act is mostly a framework for how crypto assets and tokens would be treated. It would split oversight between the Securities and Exchange Commission and the Commodity Futures Trading Commission, largely based on how decentralized an asset is perceived to be. Protections for non-custodial developers in the bill would also matter to those who mostly just care about Bitcoin; however, the non-profit crypto public policy research and advocacy center Coin Centerindicated those protections were weakened at the last minute. The revised Blockchain Regulatory Certainty Act language “would still provide important protections for non-controlling blockchain developers under the Bank Secrecy Act,” the group wrote, “but it removes the BRCA’s explicit protection against criminal liability.”

How CLARITY Fell Apart

Passage looked close to guaranteed at the start of the year. The House had already approved the bill, and the Senate Banking Committee advanced it 15-9 in May. But the coalition did not hold. Banks spent months fighting over how stablecoin rewards might pull deposits out of the traditional system. Democrats, and even some Republicans, spent those same months circling ethics language tied to the billions of dollars the Trump family has made from crypto during the president’s second term.

That said, Trump signed off on last-minute ethics provisions before the vote. A GOP aide told Crypto In America’s Eleanor Terrett that the president had agreed to “80%” of a Tillis-Gallego ethics proposal, including a requirement to divest “substantial” crypto-related interests or put them in a blind trust. Democrats said it was not enough. The same revised text also stripped explicit criminal-law protections for developers and added a “circuit breaker” that would let Treasury Secretary Scott Bessent intervene if banks faced widespread deposit flight to stablecoins (as they feared).

On the Senate floor, Democrat Elizabeth Warren argued the bill would put the country “at risk of a crypto-fueled economic crash.” She said it would “blow a massive hole in our nearly century-old securities laws” and “drain billions of dollars out of our stock market that families depend on to fund their retirement savings.”

Republican Tim Scott made the opposite case. “If you want everyday, hardworking Americans to have more access to their re leading financial country on the planet, you vote yes,” the South Carolina Republican told Fox Business. Without market structure written into law, he said, “you have the wild, wild West.”

When the roll was called, every participating Democrat voted no, and so did Republicans Susan Collins, Josh Hawley, Jerry Moran, and Thom Tillis. The 18 Democrats who had backed last year’s GENIUS Act stablecoin bill, including original Senate CLARITY co-sponsor Kirsten Gillibrand, voted against this one. Gillibrand had reportedly been gathering yes votes hours before she flipped to no.

A Democratic staffer told Terrett that Republicans “wanted to protect the president’s grift, and they know that getting on the bill exposes problems for them.”

According to Terrett, Democratic Senator Angela Alsobrooks, who helped negotiate both GENIUS and CLARITY, also accused Republican leadership of “playing a game” by forcing the vote while refusing to hold Trump accountable for crypto “corruption.”

Senator Mark Warner pointed to the same problem: “The president should not be able to use the power and influence of his office to benefit his own crypto holdings while his administration makes decisions that could directly affect their value,” the Virginia Democrat said.

Self-described progressive Bitcoiner Trey Walsh put the politics more bluntly. “Dems are laser focused on Trump corruption. And they know it resonates with voters,” he wrote on X. “So they are a hell no on Clarity as written — there is no ‘crypto voter’ in their minds for the midterms. There is the American voter pissed about affordability, corruption, and AI.”

NYU Stern professor Austin Campbell made a similar point. “I’ve been predicting Clarity would fail for a long time because all of the issues inside of the bill were solvable, but the ethics issue and Trump vs. Democrats were not.”

There were plenty of warnings over the past few months that missing ethics language and Trump’s crypto businesses could sink the bill. A financial disclosure showed about $1.4 billion in crypto-related income in 2025 alone from World Liberty Financial and the $TRUMP memecoin. Reuters separately estimated the family had made $2.3 billion from crypto projects while outside investors lost a similar amount. The problems associated with those figures were also compounded with the many accusations of corruption and pay-to-play deals associated with these crypto projects.

When it finally came time to vote on the CLARITY Act, Trump’s crypto activity ended up giving Democrats far too much political capital. Bitwise CIO Matt Hougan also blamed the broader political climate in Washington. “Compromise is impossible in DC at the moment.”

Crypto Industry Will Still Be Happy for Now

To be clear, the bill is not formally dead. It remains on the Senate calendar, and Tillis switched his vote to no so he could move to reconsider. “This is not the end for the Clarity Act,” Tillis said. “We’ve made substantial bipartisan progress in large part because of the White House. This procedural motion allows us to continue working towards a positive outcome.” Ted Cruz used a similar line. “There’s a big difference between dead and mostly dead,” he said. “I hope it comes back to life.”

For now, the calendar is the problem. Congress is heading into midterm recess, and another cloture attempt may wait until a lame-duck session or the next Congress. If Democrats do well in November, they will have even more leverage on crypto rules than Trump already handed them this time around.

Trump did not appear especially focused on the loss. As the vote failed, Punchbowl News Senior Reporter Brendan Pedersen noted the president was posting about the Kennedy Center.

Crypto companies have already poured $189 million into the 2026 midterm elections, and crypto-industry affiliated PACs like Fairshake won 48 of 48 races they backed in the last election. The crypto lobby has also previously warned politicians that resistance to pro-crypto policies carries a significant cost, and Senators who voted no just put a target on themselves. Bloomberg’s Eric Balchunas noted, “Personally, I wouldn’t piss them off.”

Even without CLARITY, the SEC and CFTC can still write pro-crypto rules while Trump is in office. The bill, however, would have locked that approach into statute. It’s clear the industry will still get favorable treatment for the next couple of years under the Trump administration’s rule. “The SEC and CFTC have the tools they need to create clear rules under existing authority, and I expect will begin working on this in earnest,” Coinbase CEO Brian Armstrong wrote on X. “So clarity is coming to crypto regardless.”

Source: gizmodo.com